Friday, 16 June 2017

What’s next? – DAX 16.06.17

The DAX index futures were higher on Friday early trading, adding 0.46 percent as of 07:20 GMT at 12,753 points as the effect of the Fed rate hike started to vanish across markets.

The Federal Reserve interest rate decision has a merely speculative effect on the stock market, which lasts a day or two at least. Then, markets tend to come back to their actual path. The DAX played by the book, falling after the FOMC meeting and pairing losses a day later.

Higher interest rates in the US increase demand for risky assets and the greenback, which attract capital to America, but also make European goods cheaper against the dollar.

A double-side shade that ultimately tends to benefit the European exports, and especially German ones considering their strong auto manufacturing industry.

Taking a look at some key players, Daimler AG ended up 0.48 percent on Thursday at 65.560, while Bayerische Motoren Werke (BMW) AG grew by 0.61 percent to 83.925.

The Fed also hinted about a third interest rate hike later this year, which could be seen as a sign for further greenback strengthening in the near future, meaning European goods will turn even cheaper for customers holding US dollars. Certainly, a bullish factor for the DAX.

Ahead today, we don’t see any relevant economic publications coming out of Germany and we expect a range trading and even some consolidation around the 12,750 mark.

As long as the index remains above the 12,750 level, buying momentum could be generated in the short term to take the DAX to 12,900 and 13,000 in extension. On the contrary, falling below the 12,750 mark would open the way for a further decline to 12,700.